[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1272 Introduced in House (IH)]







108th CONGRESS
  1st Session
                                H. R. 1272

To prohibit fraudulent, manipulative, or deceptive acts in electric and 
 natural gas markets, to provide for audit trails and transparency in 
those markets, to increase penalties for illegal acts under the Federal 
 Power Act and Natural Gas Act, to reexamine certain exemptions under 
  the Federal Power Act and the Public Utility Holding Company Act of 
    1935, to expand the authority of the Federal Energy Regulatory 
Commission to order refunds of unjust and discriminatory rates, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 13, 2003

  Mr. Dingell (for himself, Mr. Waxman, Mr. Markey, Mr. Boucher, Mr. 
 Towns, Mr. Pallone, Mr. Rush, Mr. Engel, Ms. DeGette, Mrs. Capps, Ms. 
 Schakowsky, Ms. Solis, Mr. Inslee, Ms. McCollum, Ms. Lee, Ms. Norton, 
 and Ms. Kilpatrick) introduced the following bill; which was referred 
                to the Committee on Energy and Commerce

_______________________________________________________________________

                                 A BILL


 
To prohibit fraudulent, manipulative, or deceptive acts in electric and 
 natural gas markets, to provide for audit trails and transparency in 
those markets, to increase penalties for illegal acts under the Federal 
 Power Act and Natural Gas Act, to reexamine certain exemptions under 
  the Federal Power Act and the Public Utility Holding Company Act of 
    1935, to expand the authority of the Federal Energy Regulatory 
Commission to order refunds of unjust and discriminatory rates, and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Energy Markets Fraud Prevention and 
Consumer Protection Act of 2003''.

SEC. 2. FRAUDULENT OR MANIPULATIVE PRACTICES.

    (a) Unlawful Acts.--It shall be unlawful for any entity, directly 
or indirectly, by the use of any means or instrumentality of interstate 
commerce or of the mails to use or employ, in the transmission of 
electric energy in interstate commerce, the sale of electric energy at 
wholesale in interstate commerce, the transportation of natural gas in 
interstate commerce, or the sale in interstate commerce of natural gas 
for resale for ultimate public consumption for domestic, commercial, 
industrial, or any other use, any fraudulent, manipulative, or 
deceptive device or contrivance in contravention of such rules and 
regulations as the Federal Energy Regulatory Commission may prescribe 
as necessary or appropriate in the public interest.
    (b) Application of Federal Power Act to This Section.--The 
provisions of section 307 through 309 and 313 through 317 of the 
Federal Power Act shall apply to violations of this section in the same 
manner and to the same extent as such provisions apply to entities 
subject to Part II of the Federal Power Act.

SEC. 3. RULEMAKING ON EXEMPTIONS, WAIVERS, ETC. UNDER FEDERAL POWER 
              ACT.

    Part III of the Federal Power Act is amended by inserting the 
following new section after section 319 and by redesignating sections 
320 and 321 as sections 321 and 322, respectively:

``SEC. 320. CRITERIA FOR CERTAIN EXEMPTIONS, WAIVERS, ETC.

    ``(a) Rule Required for Certain Waivers, Exemptions, etc.-- Not 
later than 6 months after the enactment of this Act, the Commission 
shall promulgate a rule establishing specific criteria for providing an 
exemption, waiver, or other reduced or abbreviated form of compliance 
with the requirements of sections 204, 301, 304, and 305 (including any 
prospective blanket order). Such criteria shall be sufficient to insure 
that any such action taken by the Commission will be consistent with 
the purposes of such requirements and will otherwise protect the public 
interest.
    ``(b) Moratorium on Certain Waivers, Exemptions, etc.--After the 
date of enactment of this section, the Commission may not issue, adopt, 
order, approve, or promulgate any exemption, waiver, or other reduced 
or abbreviated form of compliance with the requirements of section 204, 
301, 304, or 305 (including any prospective blanket order) until after 
the rule promulgated under subsection (a) has taken effect.
    ``(c) Previous FERC Action.--The Commission shall undertake a 
review, by rule or order, of each exemption, waiver, or other reduced 
or abbreviated form of compliance described in subsection (a) that was 
taken before the date of enactment of this section. No such action may 
continue in force and effect after the date 18 months after the date of 
enactment of this section unless the Commission finds that such action 
complies with the rule under subsection (a).
    ``(d) Exemption Under 204(f) Not Applicable.--For purposes of this 
section, in applying section 204, the provisions of section 204(f) 
shall not apply.''.

SEC. 4. REPORTING REQUIREMENTS IN ELECTRIC POWER SALES AND 
              TRANSMISSION.

    (a) Audit Trails.--Section 304 of the Federal Power Act is amended 
by adding the following new subsection at the end thereof:
    ``(c)(1) The Commission shall, by rule or order, require each 
person or other entity engaged in the transmission of electric energy 
in interstate commerce or the sale of electric energy at wholesale in 
interstate commerce, and each broker, dealer, and power marketer 
involved in any such transmission or sale, to maintain, and 
periodically submit to the Commission, such records, in electronic 
form, of each transaction relating to such transmission or sale as may 
be necessary to determine whether any person has employed any 
fraudulent, manipulative, or deceptive device or contrivance in 
contravention of rules promulgated by the Commission.
    ``(2) Section 201(f) shall not limit the application of this 
subsection.''.
    (b) Natural Gas.--Section 8 of the Natural Gas Act is amended by 
adding the following new subsection at the end thereof:
    ``(d) The Commission shall, by rule or order, require each person 
or other entity engaged in the transportation of natural gas in 
interstate commerce, or the sale in interstate commerce of natural gas 
for resale for ultimate public consumption for domestic, commercial, 
industrial, or any other use, and each broker, dealer, and power 
marketer involved in any such transportation or sale, to maintain, and 
periodically submit to the Commission, such records, in electronic 
form, of each transaction relating to such transmission or sale as may 
be necessary to determine whether any person has employed any 
fraudulent, manipulative, or deceptive device or contrivance in 
contravention of rules promulgated by the Commission.''.

SEC. 5. TRANSPARENCY.

    (a) Definition.--As used in this section the term ``electric power 
or natural gas information processor'' means any person engaged in the 
business of--
            (1) collecting, processing, or preparing for distribution 
        or publication, or assisting, participating in, or coordinating 
        the distribution or publication of, information with respect to 
        transactions in or quotations involving the purchase or sale of 
        electric power, natural gas, the transmission of electric 
        energy, or the transportation of natural gas, or
            (2) distributing or publishing (whether by means of a 
        ticker tape, a communications network, a terminal display 
        device, or otherwise) on a current and continuing basis, 
        information with respect to such transactions or quotations.
The term does not include any bona fide newspaper, news magazine, or 
business or financial publication of general and regular circulation, 
any self-regulatory organization, any bank, broker, dealer, building 
and loan, savings and loan, or homestead association, or cooperative 
bank, if such bank, broker, dealer, association, or cooperative bank 
would be deemed to be an electric power or natural gas information 
processor solely by reason of functions performed by such institutions 
as part of customary banking, brokerage, dealing, association, or 
cooperative bank activities, or any common carrier, as defined in 
section 3 of the Communications Act of 1934, subject to the 
jurisdiction of the Federal Communications Commission or a State 
commission, as defined in section 3 of that Act, unless the Commission 
determines that such carrier is engaged in the business of collecting, 
processing, or preparing for distribution or publication, information 
with respect to transactions in or quotations involving the purchase or 
sale of electric power, natural gas, the transmission of electric 
energy, or the transportation of natural gas.
    (b) Prohibition.--No electric power or natural gas information 
processor may make use of the mails or any means or instrumentality of 
interstate commerce--
            (1) to collect, process, distribute, publish, or prepare 
        for distribution or publication any information with respect to 
        quotations for, or transactions involving the purchase or sale 
        of electric power, natural gas, the transmission of electric 
        energy, or the transportation of natural gas, or
            (2) to assist, participate in, or coordinate the 
        distribution or publication of such information in 
        contravention of such rules and regulations as the Federal 
        Energy Regulatory Commission shall prescribe as necessary or 
        appropriate in the public interest to
            (A) prevent the use, distribution, or publication of 
        fraudulent, deceptive, or manipulative information with respect 
        to quotations for and transactions involving the purchase or 
        sale of electric power, natural gas, the transmission of 
        electric energy, or the transportation of natural gas;
            (B) assure the prompt, accurate, reliable, and fair 
        collection, processing, distribution, and publication of 
        information with respect to quotations for and transactions 
        involving the purchase or sale of electric power, natural gas, 
        the transmission of electric energy, or the transportation of 
        natural gas, and the fairness and usefulness of the form and 
        content of such information;
            (C) assure that all such information processors may, for 
        purposes of distribution and publication, obtain on fair and 
        reasonable terms such information with respect to quotations 
        for and transactions involving the purchase or sale of electric 
        power, natural gas, the transmission of electric energy, or the 
        transportation of natural gas as is collected, processed, or 
        prepared for distribution or publication by any exclusive 
        processor of such information acting in such capacity;
            (D) assure that, subject to such limitations as the 
        Commission, by rule, may impose as necessary or appropriate for 
        the maintenance of fair and orderly markets, all persons may 
        obtain on terms which are not unreasonably discriminatory such 
        information with respect to quotations for and transactions 
        involving the purchase or sale of electric power, natural gas, 
        the transmission of electric energy, or the transportation of 
        natural gas as is published or distributed by any electric 
        power or natural gas information processor;
            (E) assure that all electricity and natural gas electronic 
        communication networks transmit and direct orders for the 
        purchase and sale of electricity or natural gas in a manner 
        consistent with the establishment and operation of an 
        efficient, fair, and orderly market system for electricity and 
        natural gas; and
            (F) assure equal regulation of all markets involving the 
        purchase or sale of electric power, natural gas, the 
        transmission of electric energy, or the transportation of 
        natural gas and all persons effecting transactions involving 
        the purchase or sale of electric power, natural gas, the 
        transmission of electric energy, or the transportation of 
        natural gas.
    (c) Related Commodities.--For purposes of this section, the phrase 
``purchase or sale of electric power, natural gas, the transmission of 
electric energy, or the transportation of natural gas'' includes the 
purchase or sale of any commodity (as defined in the Commodities 
Exchange Act) relating to any such purchase or sale if such commodity 
is excluded from regulation under the Commodities Exchange Act pursuant 
to section 2 of that Act.
    (d) Prohibition.--No person who owns, controls, or is under the 
control or ownership of a public utility, a natural gas company, or a 
public utility holding company may own, control, or operate any 
electronic computer network or other mulitateral trading facility 
utilized to trade electricity or natural gas.

SEC. 6. PENALTIES.

    (a) Criminal Penalties.--Section 316 of the Federal Power Act (16 
U.S.C. 825o(c)) is amended as follows:
            (1) By striking ``$5,000'' in subsection (a) and inserting 
        ``$5,000,000 for an individual and $25,000,000 for any other 
        defendant''
            (2) By striking ``$500'' in subsection (b) and inserting 
        ``$1,000,000''.
            (3) By striking subsection (c).
    (b) Civil Penalties.--Section 316A of the Federal Power Act (16 
U.S.C. 825o-1) is amended as follows:
            (1) By striking ``section 211, 212, 213, or 214'' each 
        place it appears and inserting ``Part II''.
            (2) By striking ``$10,000 for each day that such violation 
        continues'' and inserting ``the greater of $1,000,000 or three 
        times the profit made or gain or loss avoided by reason of such 
        violation''.
            (3) By adding the following at the end thereof:
    ``(c) Authority of a Court To Prohibit Persons From Certain 
Activities.--In any proceeding under this section, the court may 
censure, place limitations on the activities, functions, or operations 
of, suspend or revoke the ability of any entity (without regard to 
section 201(f)) to participate in the transmission of electric energy 
in interstate commerce or the sale of electric energy at wholesale in 
interstate commerce if it finds that such censure, placing of 
limitations, suspension, or revocation is in the public interest and 
that one or more of the following applies to such entity:
            ``(1) Such entity has willfully made or caused to be made 
        in any application or report required to be filed with the 
        Commission or with any other appropriate regulatory agency, or 
        in any proceeding before the Commission, any statement which 
        was at the time and in the light of the circumstances under 
        which it was made false or misleading with respect to any 
        material fact, or has omitted to state in any such application 
        or report any material fact which is required to be stated 
        therein.
            ``(2) Such entity has been convicted of any felony or 
        misdemeanor or of a substantially equivalent crime by a foreign 
        court of competent jurisdiction which the court finds--
                    ``(A) involves the purchase or sale of electricity, 
                the taking of a false oath, the making of a false 
                report, bribery, perjury, burglary, any substantially 
                equivalent activity however denominated by the laws of 
                the relevant foreign government, or conspiracy to 
                commit any such offense;
                    ``(B) arises out of the conduct of the business of 
                transmitting electric energy in interstate commerce or 
                selling or purchasing electric energy at wholesale in 
                interstate commerce;
                    ``(C) involves the larceny, theft, robbery, 
                extortion, forgery, counterfeiting, fraudulent 
                concealment, embezzlement, fraudulent conversion, or 
                misappropriation of funds, or securities, or 
                substantially equivalent activity however denominated 
                by the laws of the relevant foreign government; or
                    ``(D) involves the violation of section 152, 1341, 
                1342, or 1343 or chapter 25 or 47 of title 18, United 
                States Code, or a violation of a substantially 
                equivalent foreign statute.
            ``(3) Such entity is permanently or temporarily enjoined by 
        order, judgment, or decree of any court of competent 
        jurisdiction from acting as an investment adviser, underwriter, 
        broker, dealer, municipal securities dealer, government 
        securities broker, government securities dealer, transfer 
        agent, foreign person performing a function substantially 
        equivalent to any of the above, or entity or person required to 
        be registered under the Commodity Exchange Act or any 
        substantially equivalent foreign statute or regulation, or as 
        an affiliated person or employee of any investment company, 
        bank, insurance company, foreign entity substantially 
        equivalent to any of the above, or entity or person required to 
        be registered under the Commodity Exchange Act or any 
        substantially equivalent foreign statute or regulation, or from 
        engaging in or continuing any conduct or practice in connection 
        with any such activity, or in connection with the purchase or 
        sale of any security.
            ``(4) Such entity has willfully violated any provision of 
        this Act.
            ``(5) Such entity has willfully aided, abetted, counseled, 
        commanded, induced, or procured the violation by any other 
        person of any provision of this Act, or has failed reasonably 
to supervise, with a view to preventing violations of the provisions of 
this Act, another person who commits such a violation, if such other 
person is subject to his supervision. For the purposes of this 
paragraph no person shall be deemed to have failed reasonably to 
supervise any other person, if--
                    ``(A) there have been established procedures, and a 
                system for applying such procedures, which would 
                reasonably be expected to prevent and detect, insofar 
                as practicable, any such violation by such other 
                person, and
                    ``(B) such person has reasonably discharged the 
                duties and obligations incumbent upon him by reason of 
                such procedures and system without reasonable cause to 
                believe that such procedures and system were not being 
                complied with.
            ``(6) Such entity has been found by a foreign financial or 
        energy regulatory authority to have--
                    ``(A) made or caused to be made in any application 
                or report required to be filed with a foreign 
                regulatory authority, or in any proceeding before a 
                foreign financial or energy regulatory authority, any 
                statement that was at the time and in the light of the 
                circumstances under which it was made false or 
                misleading with respect to any material fact, or has 
                omitted to state in any application or report to the 
                foreign regulatory authority any material fact that is 
                required to be stated therein;
                    ``(B) violated any foreign statute or regulation 
                regarding the transmission or sale of electricity or 
                natural gas;
                    ``(C) aided, abetted, counseled, commanded, 
                induced, or procured the violation by any person of any 
                provision of any statutory provisions enacted by a 
                foreign government, or rules or regulations thereunder, 
                empowering a foreign regulatory authority regarding 
                transactions in electricity or natural gas, or 
                contracts of sale of electricity or natural gas, traded 
                on or subject to the rules of a contract market or any 
                board of trade, or has been found, by a foreign 
                regulatory authority, to have failed reasonably to 
                supervise, with a view to preventing violations of such 
                statutory provisions, rules, and regulations, another 
                person who commits such a violation, if such other 
                person is subject to his supervision.
            ``(7) Such entity is subject to any final order of a State 
        commission (or any agency or officer performing like 
        functions), State authority that supervises or examines banks, 
        savings associations, or credit unions, State insurance 
        commission (or any agency or office performing like functions), 
        an appropriate Federal banking agency (as defined in section 3 
        of the Federal Deposit Insurance Act (12 U.S.C. 1813(q))), or 
        the National Credit Union Administration, that--
                    ``(A) bars such person from association with an 
                entity regulated by such commission, authority, agency, 
                or officer, or from engaging in the business of 
                securities, insurance, banking, savings association 
                activities, or credit union activities; or
                    ``(B) constitutes a final order based on violations 
                of any laws or regulations that prohibit fraudulent, 
                manipulative, or deceptive conduct.
            ``(8) Such entity is subject to statutory disqualification 
        within the meaning of section 3(a)(39) of the Securities 
        Exchange Act of 1934.''.
    (c) Natural Gas Act Penalties.--Section 21 of the Natural Gas Act 
is amended by adding the following new subsection at the end thereof:
    ``(c) Authority of a Court To Prohibit Persons From Certain 
Activities.--In any proceeding under this section, the court may 
censure, place limitations on the activities, functions, or operations 
of, suspend or revoke the ability of any entity (without regard to 
section 201(f)) to participate in the transportation of natural gas in 
interstate commerce, or the sale in interstate commerce of natural gas 
for resale for ultimate public consumption for domestic, commercial, 
industrial, or any other use if it finds that such censure, placing of 
limitations, suspension, or revocation is in the public interest and 
that one or more of the following applies to such entity:
            ``(1) Such entity has willfully made or caused to be made 
        in any application or report required to be filed with the 
        Commission or with any other appropriate regulatory agency, or 
        in any proceeding before the Commission, any statement which 
        was at the time and in the light of the circumstances under 
        which it was made false or misleading with respect to any 
        material fact, or has omitted to state in any such application 
        or report any material fact which is required to be stated 
        therein.
            ``(2) Such entity has been convicted of any felony or 
        misdemeanor or of a substantially equivalent crime by a foreign 
        court of competent jurisdiction which the court finds--
                    ``(A) involves the purchase or sale of natural gas, 
                the taking of a false oath, the making of a false 
                report, bribery, perjury, burglary, any substantially 
                equivalent activity however denominated by the laws of 
                the relevant foreign government, or conspiracy to 
                commit any such offense;
                    ``(B) arises out of the conduct of the business of 
                transmitting natural gas in interstate commerce, or the 
                selling in interstate commerce of natural gas for 
                resale for ultimate public consumption for domestic, 
                commercial, industrial, or any other use;
                    ``(C) involves the larceny, theft, robbery, 
                extortion, forgery, counterfeiting, fraudulent 
                concealment, embezzlement, fraudulent conversion, or 
                misappropriation of funds, or securities, or 
                substantially equivalent activity however denominated 
                by the laws of the relevant foreign government; or
                    ``(D) involves the violation of section 152, 1341, 
                1342, or 1343 or chapter 25 or 47 of title 18, United 
                States Code, or a violation of a substantially 
                equivalent foreign statute.
            ``(3) Such entity is permanently or temporarily enjoined by 
        order, judgment, or decree of any court of competent 
        jurisdiction from acting as an investment adviser, underwriter, 
        broker, dealer, municipal securities dealer, government 
        securities broker, government securities dealer, transfer 
        agent, foreign person performing a function substantially 
        equivalent to any of the above, or entity or person required to 
        be registered under the Commodity Exchange Act or any 
        substantially equivalent foreign statute or regulation, or as 
        an affiliated person or employee of any investment company, 
        bank, insurance company, foreign entity substantially 
        equivalent to any of the above, or entity or person required to 
        be registered under the Commodity Exchange Act or any 
        substantially equivalent foreign statute or regulation, or from 
        engaging in or continuing any conduct or practice in connection 
        with any such activity, or in connection with the purchase or 
        sale of any security.
            ``(4) Such entity has willfully violated any provision of 
        this Act.
            ``(5) Such entity has willfully aided, abetted, counseled, 
        commanded, induced, or procured the violation by any other 
        person of any provision of this Act, or has failed reasonably 
        to supervise, with a view to preventing violations of the 
        provisions of this Act, another person who commits such a 
        violation, if such other person is subject to his supervision. 
        For the purposes of this paragraph no person shall be deemed to 
        have failed reasonably to supervise any other person, if--
                    ``(A) there have been established procedures, and a 
                system for applying such procedures, which would 
                reasonably be expected to prevent and detect, insofar 
                as practicable, any such violation by such other 
                person, and
                    ``(B) such person has reasonably discharged the 
                duties and obligations incumbent upon him by reason of 
                such procedures and system without reasonable cause to 
                believe that such procedures and system were not being 
                complied with.
            ``(6) Such entity has been found by a foreign financial or 
        energy regulatory authority to have--
                    ``(A) made or caused to be made in any application 
                or report required to be filed with a foreign 
                regulatory authority, or in any proceeding before a 
                foreign financial or energy regulatory authority, any 
                statement that was at the time and in the light of the 
                circumstances under which it was made false or 
                misleading with respect to any material fact, or has 
                omitted to state in any application or report to the 
                foreign regulatory authority any material fact that is 
                required to be stated therein;
                    ``(B) violated any foreign statute or regulation 
                regarding the transmission or sale of electricity or 
                natural gas;
                    ``(C) aided, abetted, counseled, commanded, 
                induced, or procured the violation by any person of any 
                provision of any statutory provisions enacted by a 
                foreign government, or rules or regulations thereunder, 
                empowering a foreign regulatory authority regarding 
                transactions in electricity or natural gas, or 
                contracts of sale of electricity or natural gas, traded 
                on or subject to the rules of a contract market or any 
                board of trade, or has been found, by a foreign 
                regulatory authority, to have failed reasonably to 
                supervise, with a view to preventing violations of such 
                statutory provisions, rules, and regulations, another 
                person who commits such a violation, if such other 
                person is subject to his supervision.
            ``(7) Such entity is subject to any final order of a State 
        commission (or any agency or officer performing like 
        functions), State authority that supervises or examines banks, 
        savings associations, or credit unions, State insurance 
        commission (or any agency or office performing like functions), 
        an appropriate Federal banking agency (as defined in section 3 
        of the Federal Deposit Insurance Act (12 U.S.C. 1813(q))), or 
        the National Credit Union Administration, that--
                    ``(A) bars such person from association with an 
                entity regulated by such commission, authority, agency, 
                or officer, or from engaging in the business of 
                securities, insurance, banking, savings association 
                activities, or credit union activities; or
                    ``(B) constitutes a final order based on violations 
                of any laws or regulations that prohibit fraudulent, 
                manipulative, or deceptive conduct.
            ``(8) Such entity is subject to statutory disqualification 
        within the meaning of section 3(a)(39) of the Securities 
        Exchange Act of 1934.''.

SEC. 7. REVIEW OF PUHCA EXEMPTIONS.

    Not later than 12 months after the enactment of this Act the 
Securities and Exchange Commission shall review each exemption granted 
to any person under section 3(a) of the Public Utility Holding Company 
Act of 1935 and shall review the action of persons operating pursuant 
to a claim of exempt status under section 3 to determine if such 
exemptions and claims are consistent with the requirements of such 
section 3(a) and whether or not such exemptions or claims of exemption 
should continue in force and effect.

SEC. 8. REVIEW OF ACCOUNTING FOR CONTRACTS INVOLVED IN ENERGY TRADING.

    Not later than 12 months after the enactment of this Act, the 
Financial Accounting Standards Board shall submit to the Congress a 
report of the results of its review of accounting for contracts in 
energy trading and risk management activities. The review and report 
shall include, among other issues, the use of mark-to-market accounting 
and when gains and losses should be recognized, with a view toward 
improving the transparency of energy trading activities for the benefit 
of investors, consumers, and the integrity of these markets.

SEC. 9. PROTECTION OF FERC REGULATED SUBSIDIARIES.

    Section 205 of the Federal Power Act is amended by adding after 
subsection (f) the following new subsection:
    ``(g) Rules and Procedures To Protect Consumers of Public 
Utilities.--Not later than 9 months after the date of enactment of this 
Act, the Commission shall adopt rules and procedures for the protection 
of electric consumers from self-dealing, interaffiliate abuse, and 
other harmful actions taken by persons owning or controlling public 
utilities. Such rules shall ensure that no asset of a public utility 
company shall be used as collateral for indebtedness incurred by the 
holding company of, and any affiliate of, such public utility company, 
and no public utility shall acquire or own any securities of the 
holding company or other affiliates of the holding company unless the 
Commission has determined that such acquisition or ownership is 
consistent with the public interest and the protection of consumers of 
such public utility.''.

SEC. 10. REFUNDS UNDER THE FEDERAL POWER ACT.

    Section 206(b) of the Federal Power Act is amended as follows:
            (1) By amending the first sentence to read as follows: ``In 
        any proceeding under this section, the refund effective date 
        shall be the date of the filing of a complaint or the date of 
        the Commission motion initiating the proceeding, except that in 
        the case of a complaint with regard to market-based rates, the 
        Commission may establish an earlier refund effective date.''.
            (2) By striking the second and third sentences.
            (3) By striking out ``the refund effective date or by'' and 
        ``, whichever is earlier,'' in the fifth sentence.
            (4) In the seventh sentence by striking ``through a date 
        fifteen months after such refund effective date'' and insert 
        ``and prior to the conclusion of the proceeding'' and by 
        striking the proviso.

SEC. 11. ACCOUNTS AND REPORTS.

    Section 318 of the Federal Power Act is amended by adding the 
following at the end thereof: ``This section shall not apply to 
sections 301 and 304 of this Act.''.

SEC. 12. MARKET-BASED RATES.

    Section 205 of the Federal Power Act is amended by adding the 
following new subsection at the end thereof:
    ``(g) For each public utility granted the authority by the 
Commission to sell electric energy at market-based rates, the 
Commission shall review the activities and characteristics of such 
utility not less frequently than annually to determine whether such 
rates are just and reasonable. Each such utility shall notify the 
Commission promptly of any change in the activities and characteristics 
relied upon by the Commission in granting such public utility the 
authority to sell electric energy at market-based rates. If the 
Commission finds that--
            ``(1) a rate charged by a public utility authorized to sell 
        electric energy at market-based rates is unjust, unreasonable, 
        unduly discriminatory or preferential,
            ``(2) the public utility has intentionally engaged in an 
        activity that violates any other rule, tariff, or order of the 
        Commission, or
            ``(3) the public utility has violated section 2 of the 
        Energy Markets Fraud Prevention and Consumer Protection Act of 
        2003,
the Commission shall issue an order immediately modifying or revoking 
the authority of that public utility to sell electric energy at market-
based rates.''.
                                 <all>